FINANCIAL MARKETS : Dow Up 25.47; Other Markets Post Gains
Market Overview
* Cautious optimism about the Treasury’s debt refunding auction helped the Dow Jones industrial average to a robust rally, although the broader market indexes managed only narrow gains.
* Solid demand at the Treasury’s auction of three-year notes failed to stir much excitement in government bond trading as traders awaited the two remaining legs of this week’s huge quarterly refunding.
Stocks
The Dow Jones industrial average of 30 big-company stocks rose 25.47 points to 3,468.75 on Big Board volume of 221.6 million shares, down from 235.6 million shares Monday.
The Dow, like the rest of the market, traded in narrow ranges for most of the day. But about 30 minutes before the session’s end, the average made a firm move upward in a wave of computer-guided program trading, analysts said.
The relatively strong results of today’s $16-billion, three-year bond auction helped boost stocks, said James Solloway, director of research at Argus Research Corp.
Bank stocks, generally sensitive to interest rate moves, gathered strength after the auction. Chase Manhattan gained 1 to 30 7/8, Chemical Bank rose 1 1/4 to 39 1/2 and J.P. Morgan rose 1 1/4 to 68 3/8.
Also generating positive sentiment for the market, analysts said, is that any new U.S. action in Bosnia appears to have been deferred. Uncertainty about the issue bruised the market last week.
But overall, the market remained in a narrow trading range, waiting for direction from further signs of strength or weakness in the economy.
Among the market highlights:
* Philip Morris fell 1 1/4 to 51 1/2 and RJR Nabisco was up 1/4 to 6. Tobacco stocks have been volatile recently because of concern over possible new taxes to pay for health care and competition from no-name brands.
* Medical stocks were mixed. Uncertainty over the Clinton Administration’s health care policy has shaken the industry. Glaxo rose 1 1/8 to 19 3/4 and Humana rose 1/2 to 10 3/8, but Merck fell 1/8 to 37 5/8.
* Anheuser-Busch rose 1 7/8 to 51 3/4 on a report that beer may be exempt from any new government taxes on alcohol and tobacco.
* Louisiana Pacific rose 7/8 to 64 after the stock was upgraded by an analyst. The stock has tumbled since early April because of the recent decline in wood product prices. Georgia Pacific rose 1 1/8 to 64 1/4.
* In NASDAQ trading, Intel fell 3 to 99 1/2 after an analyst downgraded the stock.
The NASDAQ composite index gained 0.24 to 683.06. The NYSE composite index rose 0.85, to 245.88, while the American Stock Exchange market value index rose 0.56, to 427.25.
Overseas, London’s Times-100 index finished 6.3 points up at 2,836.1. Frankfurt’s 30-share DAX index ended 7.12 points higher at 1,616.15. Tokyo’s 225-share Nikkei average ended 114.34 points lower at 20,940.37.
Credit
The price of the Treasury’s benchmark 30-year bond was unchanged as its yield closed at 6.81%, the same level it was at late Monday. Prices of most shorter-term maturities were slightly higher as their yields slipped.
Results of the Treasury auction did not exceed expectations enough to influence traders in the secondary market, where newly auctioned securities are bought and sold.
“There’s been very little market reaction,” said Dana Johnson, head of market analysis for First Chicago Capital Markets in Chicago. “It’s as if the auction results didn’t happen.”
Johnson noted that three-year note auctions often fail to influence the broader secondary market because the Treasury typically has little trouble drumming up interest in the security, which is popular among investors.
Other Markets
The dollar slipped Tuesday in thin trading after weak U.S. retail sales figures cut short a brief rally by squelching hopes for more upbeat U.S. economic reports this week.
U.S. adjusted retail sales rose just 0.3% in the first week of May, according to a report by Johnson Redbook. That’s far below the 1.2% rise economists expect for April in a government report scheduled for release Thursday.
The dollar fell to 1.6065 German marks in late New York trading, from 1.6088 marks Monday. Also in New York, the dollar was at 111.34 yen in late dealings, down from 111.78 yen Monday. The pound rose to $1.5421 in New York from $1.5320 late Monday.
Gold prices rose 10 cents on New York’s Commodity Exchange, where bullion for current delivery settled at $356.70 an ounce. A late quote from Republic National Bank put spot gold at $356.30 an ounce, up 30 cents from Monday.
Prices for oil and refined products settled lower after a late sell-off ended a day of quiet, directionless trading. Heating oil and gasoline futures led the late-session drop that put petroleum prices near their session lows.
Light, sweet crude oil for delivery in June settled at $20.34 per barrel, 10 cents lower at the New York Mercantile Exchange.
Market Roundup, D6
